About Me

I used to watch TV news and yell at the box. Now I jump up from the couch, sit at the computer and begin to type laughing maniacally saying "Wait until they read this." It's more fun than squashing tadpoles

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Thursday, December 08, 2005

Unfair Tax Bill

Congress is debating the tax bill. Republicans want to cut this tax and that tax, Democrats want this group to have benefits and that group to have benefits. Targeted tax cuts, special deductions, claims of influence from special interests all of it missing the point. All of this is contrary to the founding principles of America.

In this country all are equal under the law. Not an equality of outcome, but an expectation that the law applies to all regardless of demographic. Though we have had to fine tune this system it works fairly well, except when we get to taxes.

Any tax system that gives breaks to certain sectors or individuals is not equitable. Any system that charges different rates to different people is not equitable. The only system that is equitable is one where everyone gets the same deductions for the same amounts and everyone pays the same rate.

The most common argument for a progressive tax rate is "The wealthy must pay their fair share." , or "Those who can best afford to should accept the greatest burden.". The first argument bastardizes the meaning of the word fair. In an equitable society it is not fair that one person has to accept a higher rate than another. If this were an acceptable meaning for the word than retailers could charge different prices to different people. In both statements defending a progressive tax could also defend such a case for retailers. Since we do not live under a socialist economy, as least not yet, this cannot occur.

So why do we labor under a socialist tax code? It is too easy for politicians to exploit the antipathy toward taxes in general and envy specifically to convince a majority of people to support a system that takes more from those who have more. It is then impossible for politicians to resist the use of tax breaks to buy votes and curry favor. Add to that the common ignorance of simple economics and you have a tax code that is full of nonsense and contradiction.

The way out is for a flat rate tax. It would simplify paying of taxes, make enforcement easier and take the tax code out of the meddling hands of politicians. A cap on the rate and indexing the basic deduction would be absolutely necessary. Taxes would become a vehicle for raising revenue and not a social engineer or vote buying tool. The most important aspect would be we will have brought the tax code in line with the principles this nation was founded on.

10 Comments:

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old 'n cranky said...

>retailers could charge different prices to different people.<

Now see, you just dont understand how this works when it comes to public policy stuff like tax rates. Its not about fair, its about perception, FEEEELINGS..... to make it really simple - a rich person has lots of money, a poor person doesnt have a lot of money. Now if we assign a unit value of (oh lets be arbitrary and make this simple) 1 to each piece of money each individual has then the person with more money has more unit values and the person with less has fewer unit values. With me so far?

OK, now comes the sleight of mind. Lets posit that every person has the same amount of available "feeling" and divide that amount of feeling by the unit value of the money each person has - simple math - the rich person FEELS less about each unit value than the poor person does. I mean mathematically we just assigned differing amounts of feeling to each persons identical unit value of money.

So it only goes to show you that the rich NEED to pay over more unit values of money in order to achieve perceptual parity with the poor person. Now thats fair!

I had thought that retailers were free to charge different prices to different people - it's rarely successful, because people don't like it, but it's not illegal.

In your definition of fair you seem to rule out the so-called FairTax amongst others. It contains a provision to give people back some of the money they notionally spend in taxes, but without checking whether that money was actually spent. That's treating different people's money differently, which is what you call unfair.

It is perhaps a poor analogy on my part. Student, senior abd military discounts are examples of different prices fror a single item. The rub comes when such offerings are mandated by law. Then is when I question the fairness in light of the concept of equality under the law.